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Equity markets rose worldwide on Monday, lifted by gains in Japanese shares, while disappointing quarterly results from IBM weighed on the Dow and helped buoy safe-haven US Treasuries prices. European stocks closed lower, however, after a profit warning from German business software maker SAP hit technology shares, while the IBM results dragged the Dow lower.
Japan's Nikkei average surged 4 per cent, however, underpinned by news that Japan's $1.2 trillion public pension would likely more than double its allocation to domestic stocks to about 25 per cent.
IBM shares were last down about 7 per cent at $169.24. The decline helped support Treasuries prices, and while it weighed on the Dow, the S&P 500 and Nasdaq advanced.
IBM reported a 4 per cent drop in quarterly revenue, hurt by weak sales in its software and services businesses.
Total revenue fell to $22.4 billion in the third quarter ended September 30 from $23.4 billion a year earlier.
"IBM is in a transition and will need to continue to be in transition to catch up," said Art Hogan, chief market strategist at Wunderlich Securities in New York. "We can look at earnings misses as they should be viewed, which is company-specific," he added.
US corporate earnings season will ramp up this week, with nearly 130 S&P 500 companies scheduled to report. Apple Inc , which was up 1.7 per cent at $99.34, is scheduled to report after the close Monday.
The Nikkei's gain on Monday, which led a rally in Asia and buoyed a measure of worldwide stock market performance, marked its biggest daily rise since June 2013.
"This sends a really strong psychological message that the smartest money in Japan, at the pension fund, is willing to take a much more aggressive bet that Japanese equities are moving higher in the future," said Chris Konstantinos, head of international portfolio management at RiverFront Investment Group in Richmond, Virginia.
MSCI's all-country world index was last up 0.6 per cent, to 399.37, while the FTSEurofirst 300 index of top European shares closed down 0.58 per cent at 1,272.72.
The Dow Jones industrial average was last down 0.17 per cent, to 16,353.34, while the S&P 500 was up 0.51 per cent, to 1,896.32. The Nasdaq Composite was up 0.85 per cent, to 4,294.48.
Benchmark 10-year US Treasury notes were last up 2/32 in price to yield 2.19 per cent. The US dollar index , which tracks the greenback versus a basket of six currencies, fell 0.16 per cent to 84.978.
Brent crude resumed its decline on nagging concerns about abundant supply and sluggish demand, and was last down $0.29, or 0.34 per cent, at $85.87 a barrel. US crude was last up $0.26, or 0.31 per cent, at $83.01.
